A new platform has emerged in the property-based equity crowdfunding sector.
Joining the likes of Property Moose and The House Crowd, Property Partner will offer its investors the chance to acquire an equity slice of individual and residential properties. Those backers thus generate a monthly rental income as well as benefiting from any capital appreciation in the property itself. Such benefits are of course directly proportional to the size of a given ownership stake.
“Time and time again I wanted to invest in residential property in a particular area. I would see nice coffee shops starting to pop up, steady increases in the number of estate agents setting up shop, regeneration plans being approved – but still didn’t make the step.
“The reality is that buying a residential investment property is more like starting a business than making a simple investment.”
“We’ve overcome significant financial, regulatory and technical challenges to make this a reality and the strong demand for our first property reinforces my belief that we have built something investors really want.”
Unlike traditional equity crowdfunding investments, investors are offered the option to make an exit at market value after a period of 5 years. This exit route is open to all investors – irrespective of the size of their investment. A designated secondary market is also in place, should any backers wish to liquidate their investment ahead of schedule.
The platform is regulated by the FCA. Funds that are sitting idly in a Property Partner account, yet to be invested, are protected by the FSCS guarantee. In terms of fees, the platform levies a one-off charge of 2% of the amount invested, in addition to a monthly 12.5% (+VAT) cut of gross rental income – in payment for the advertising, letting and managing of the property.
Property Partner recently raised £1.25m in a seed round that included Octopus Investments (which has also backed Zoopla) and Seedcamp (which has invested in TransferWise). The platform has also on-boarded a pair of prominent Angel investors in the form of Better Capital Founder Jon Moulton and Ed Wray – Co-Founder of Betfair and Funding Circle Director. Former RBS Global Director of Residential Investment Robert Weaver is also joining the platform as Director of Property.
In the debt space, the various property-focused platforms have been amongst the UK’s fastest growing. Property Partner and its ilk offer a different prospect: a chance to share in the potential upside, but also to share in the risk, of acquiring ownership in a property. As to the question of whether this strand of platforms will begin to fizz with the same vivacity as the likes of LendInvest and Wellesley & Co., we’re reminded of a report from the Royal Institution of Chartered Surveyors – published in October last year. The RICS speculated that equity crowdfunders could inject as much as £50 billion into the housing market over the next 5 years.
As Josh Miller, a senior economist at the RICS, explained:
“This sector, rather than the banking system, may well be the source of the next liquidity shock to the housing market. In this sense, the next boom could be equity, rather than debt driven.”
The Property Partner team will certainly hope so.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.